The Forum of Private Business feels that the margins being made by many small businesses have reduced in recent years, driven by the living wage, currency fluctuations, pension provision, late payment, larger businesses driving down margins, less financial support in terms of short-term small loans particularly from the banks and tough competition.
This means that many small businesses no longer have a big enough cash shock absorber to deal with business issues that cause cash flow problems, this, in turn, can lead to business failure.
We see landlords still expecting high rents and estate agents fuel this expectation as they know a high valuation will secure a rented business premise and landlords are becoming a big part of the problem and they are often driven by short-term greed rather than long-term objectives.
We are seeing those retailers who can, florists and food manufacturers and retailers moving their production units out of town while taking a smaller space on the high street to sell to customers in order to make dramatic savings on their rent.
In terms of new retail concepts, how does an entrepreneur with a great new retail idea get a foothold on the high street, the prices are often too high and length of lease too long. So it’s difficult for them to set up in a small way, learn their trade and develop a customer base, let’s not forget that many of Britain’s bigger businesses started in a far smaller way.
- Fortnum and masons market stall selling candles and tea William Fortnum Hugh Mason 1707 St James market
- Marks and Spencer Michael marks market stall on Kirkgate market Leeds a fellow trader lent him £5 and taught him basic English
- Tesco jack Cohen demob money hackney market 1919
- Dunelm 1979 Jean And bill Adderley Leicester market selling curtains over 4,000 employees
- The apprentice star lord sugar Trading as AMS Trading company started with a minivan as his showroom before moving to rented premises in Clerkenwell
While there has been help given to business start-ups through business hubs, so small tech or engineering businesses can get short-term leases and cheap small business units, retailers don’t have these benefits.
Areas like Cargo at Wapping Wharf in Bristol, show us the way forward, the ability for the retailers of the future to take short-term fairly priced units where they can learn their retailing skills and develop a customer base before moving to larger hopefully high street premises.
So we feel government and landlords should be encouraged to support more of these retail development areas to develop the retailers of the future, some of whom will be able to scale up and develop into national or potentially international brands.
Many towns have areas that could be developed for these purposes, we also have many underdeveloped or underutilised market halls and areas that could be redeveloped to fit this purpose. You only have to look at the success of Altrincham market and its surrounding area to see what could be achieved, interest-free loans from the council also helped.
For this project to work we need to look at business rates, this inefficient tax system needs to be overhauled as soon as possible, but business rates should be suspended on these development areas for a period of 3 years while the business is growing and developing, letting the business reinvest money in its growth and creating a firm foundation for its future success.
The Forum intends to put its time and resources into the process of building these retail development areas, we will work with entrepreneurs, landlords, councils, local and national government to make this project a reality.